PROVIDER ALERT: Pharmacy Receives “Backpay” from Pharmacy Benefit Manager After Submitting Complaint

An Iowa based pharmacy recently received a $137,000 refund from a pharmacy benefit manager (PBM) after the pharmacy submitted a complaint about the PBM’s business practice of retroactively recouping money from the pharmacy. The recoupment in question related to what is known as “effective rate reconciliation” for the 2022 period. However, in Iowa, laws were recently enacted to prohibit PBMs from engaging in the practice of retroactive reductions in reimbursement. Since the recoupment in question constituted a retroactive reduction in reimbursement, the pharmacy submitted a complaint to the Iowa Insurance Division (“Insurance Division”).

In response to the complaint to the Insurance Division, the PBM fully refunded the money totaling $137,000. The relevant law states that a PBM “shall not retroactively reduce or increase reimbursement, through adjustment or reconciliation or any other means, of a clean claim paid to pharmacies.” Importantly, Iowa is not alone in enacting laws aimed at curbing aggressive, and often unfair, PBM business practices including retroactive reductions to reimbursement. States such as North Dakota and Tennessee have also taken similar actions to protect pharmacies from these PBM practices.

Pharmacies should be aggressive in combatting improper business practices by PBMs, including  taking advantage of the types of laws in Iowa that allows pharmacies to get back money from PBMs. However, navigating these laws can be complex, emphasizing the importance of legal counsel to effectively navigate these laws to obtain a successful result.

How Frier Levitt Can Help

Frier Levitt represents thousands of pharmacies across the United States as well as various  life sciences and healthcare industry stakeholders with an emphasis on PBM issues. Our firm has successfully taken on some of the most troubling PBM tactics including improper PBM audit and recoupment practices, PBM network access issues, DIR fees, and PBM reimbursement issues. Our attorneys have extensive knowledge of all aspects of PBMs in terms of their relationships with payors and pharmacies.

Contact us to speak with an attorney about how payors and pharmacies can leverage the various laws and protections afforded to pharmacies. In addition to traditional billing, we offer our clients alternative fee arrangements and other billing structures, ensuring that legal support is accessible and cost-effective. We are happy to discuss how we can tailor our legal services to meet your specific needs, protect your interests, and help you achieve success in your pharmacy operations.